European Markets Trim Weekly Gains, Allianz and Valeo in Focus

Lucy Stoeva
19 Feb, 2016
New York City

European bourses trimmed weekly gains after oil price resumed slide. French auto parts maker Valeo raised its dividend by 36% after net profit surged 30%. Insurer Allianz reported profit growth of 6.3%.

[R]4:00 PM Frankfurt, Germany – European bourses trimmed weekly gains after oil price resumed slide. French auto parts maker Valeo raised its dividend by 36% after net profit surged 30%. Insurer Allianz reported profit growth of 6.3%.[/R]

European bourses are headed towards closing one of their best weeks in 2016, despite retreating on Friday due to profit taking in banks and miners, combined with weakness in energy stocks after oil prices slid again.

Financial services stocks staged partial recovery this week from the lows in 2016 as investors remained cautious in the uncertain regulatory and tough profit environment.

The oil price rally ended after the U.S. crude inventories piled up and Saudi Arabia appeared hesitant to cut production, exacerbating concerns about global oversupply.

Brent crude oil futures of immediate month delivery tumbled 3.5% to $33.08 and West Texas Intermediate crude oil dropped 4.58% to $29.36.

Among oil producers, Royal Dutch Shell lost 2.2% and BP shed 1.2%.

The automobile sector stocks were mixed and Volkswagen plunged 5.1% on media reports that an agreement with the U.S. authorities is unlikely before the end of March, but French part maker Valeo jumped 4.5% after raising its dividend by 36%.

The search for safety pushed the stocks of gold producers Randgold Resources and Fresnillo more than 2% higher.

In London, FTSE 100 index fell 46.81, or 0.78% to 5,925.14 despite positive retail data.

The U.K. Office for National Statistics said retail sales in January rose 2.3% from the previous month and 5.2% from January 2014.

In Frankfurt, the DAX index retreated 117.64, or 1.24%, to 9,346.00, while in Paris, the CAC 40 index dropped 38.55, or 0.91%, to 4,201.21.

Nevertheless, all the major indexes are headed towards gains of 2% to 3% for the week.

Allianz SE lost 1.6% to €133.55 after the German insurer said expected little growth in 2016 operating profit, despite fourth-quarter profit growth of 16%.

Net profit rose to €1.42 billion in the last quarter from a year ago on improvement of Pimco asset-management and the euro’s weakness against the dollar.

For the full-year, net profit rose 6.3% to €6.62 billion.

Operating profit was up 3.2% to €10.74 billion in 2015 and Allianz expects it to remain little changed in 2016 due to higher uncertainty.

Total revenue increased 2.4% to €125.2 billion from a year ago.

The European insurer will pay a dividend of €7.30 a share for 2015, up from €6.85 for 2014.

Coca-Cola HBC AG picked up 2.84% to 1,413 after the company said 2015 volumes increased 2.6% to 2.06 billion cases.

Nevertheless, the European bottler of Coca-Cola beverages reported a slowdown in revenue and profit because the challenging economy limited its ability to raise prices.

Net profit in 2015 was €280.3 million euros, down from €294.8 million in 2014.

Revenue decreased to €6.35 billion in 2015 from €6.51 billion a year ago.

Dividend, however, rose 11.1% to €0.40.

Essentra Plc climbed 9.1% to 813 pence after the packaging company exceeded the revenue benchmark of £1 billion for the first time and said it was confident in 2016 growth.

Pre-tax profit fell 9% to £90.4 million due to higher than expected costs, but without amortization and exceptional operating items, pre-tax profit rose 21% to £161 million.

Full-year dividend increased 13% to 20.7 pence per share.

Valeo SA soared 4.5% to €124.10 after the French auto parts maker reported robust growth in full-year net profit and proposed a 36% increase in dividend.

Net income increased 30% to €729 million, while sales rose 14% to €14.54 billion from a year ago.

The company estimated “strong sales growth” in 2016 and an increase in operating margin due to the global automotive production growth of 2.5% and the stable material prices.

The management proposed dividend of €3 per share for the full-year 2015.